The Deal: Doubt Lingers Over Investor's Support for AsiaInfo Buyout

The buyout of the Beijing-based telecom customer service software maker remains in question because of co-chairman Libin Sun's reservations.

NEW YORK (The Deal) -- AsiaInfo-Linkage (ASIA) filed an amended proxy statement Wednesday regarding its $890 million acquisition by Citic Capital Holdings Ltd., a vehicle part owned by the sovereign investment fund China Investment Corp., showing that its disgruntled co-chairman still opposes the buyout.

The buyout of the Beijing-based telecom customer service software maker remains somewhat in doubt over support from its co-chairman and largest shareholder Libin Sun, who owns 17.3% of AsiaInfo-Linkage stemming from the 2009 sale of his company Linkage Technologies International Holdings Ltd. to AsiaInfo.

The deal with Citic, which involves a rollover investment from AsiaInfo co-founder Edward Tian, with 9.3% of the target, and James Ding, AsiaInfo's other co-chairman, with 1.4%, offers $12 per share for AsiaInfo-Linkage. Citic, which began its pursuit of the company in January 2012 following a previous investment relationship, owns 4.5% of AsiaInfo.

The deal does not require a majority of the minority vote.

With its approach to AsiaInfo in January 2012, Citic said its interest in acquiring the company hinged on either Tian or Sun participating in the buyout. Citic asked both shareholders to roll equity but did not require that they both did so. Tian agreed to participate in a potential deal. Sun, however, said that he did not intend to partner with Citic and that the deal was financially inadequate and disruptive and that the company should remain independent. Sun told the special committee at the time that he would support a deal even at a higher price because he did not think Citic as an owner could add any value to the AsiaInfo.

Shares of Asiainfo-Linkage (Nasdaq:ASIA) were gapping up Friday morning with an open price 12.7% higher than Thursday's closing price. The stock closed at $9.92 yesterday and opened today's trading at $11.18.